HTC Caught Using Nokia?s Technology, Supplier is the One to Blame?

Yesterday the Finnish mobile phone manufacturer won a court injunction that could pose a major threat to HTC One sales, although the Taiwanese manufacturer doesn’t believe that will be the case. An injunction was granted for the HAAC microphone technology that Nokia (NYSE:NOK) invented and manufactured via ST Microelectronics (NYSE:STM), which is used in the HTC flagship phone.

Nokia used this tech for the first time in the Nokia 808 PureView, followed by the more recent units Lumia 920 and Lumia 720. White paper describing this particular technology can be found on the link (.pdf format). Nokia?s engineers took apart the HTC One only to find that it was filled with the same tech components (microphones) they did not license or sell to the HTC Corp. (TPE:2498), and yet they (HTC) promoted the technology as if it were their own invention (?our dual-membrane microphones?), and as one of the key features of the flagship. Allegedly the manufacturer ST Microelectronics ?didn?t know that the deal with Nokia is exclusive for another 12 months.?

The Amsterdam District Court ordered ST Microelectronics to stop supplying HTC Corp. with microphones developed by the Nokia. Additionally, ST Microelectronics will have to pay Nokia $63,000 (50,000 EUR) for each microphone it sells to the other parties, and the ban itself will be lifted on March 1, 2014. While the HTC is not directly blamed for this situation, they will have to find another component supplier for the HTC One units ? and it is unknown how exactly will they nullify the issue, given that they are not allowed to use the technology from Nokia.

Following the decision of the court in Amsterdam, Nokia provided the following press release:

"The Amsterdam District Court has today granted Nokia’s request for a preliminary injunction against the supply to HTC of microphone components invented by and manufactured exclusively for Nokia.

Nokia filed this action after it discovered these components in the HTC One; HTC has no license or authorization from Nokia to use these microphones or the Nokia technologies from which they have been developed.

In its marketing materials, HTC claims that its HDR microphone is a key feature for the HTC One, but it is Nokia technology, developed exclusively for use in Nokia products.

This is one of the latest in a number of cases brought by Nokia to end HTC’s unauthorized use of Nokia’s inventions. More than 40 Nokia patents have been asserted against HTC in Germany, the US and the UK. An injunction against HTC devices in Germany, which were found on March 19 to infringe Nokia’s patent EP 0 673 175, is now in effect. The latest case, on Nokia patent EP 1 579 613 B1 was filed in Mannheim, Germany on April 16.

Once again, Nokia calls on HTC to compete using its own innovations and to stop copying from Nokia."

HTC said that they were disappointed with the court decision: ?We are considering whether it will have any impact on our business and we will explore alternative solutions immediately." In a brief statement to the PureViewClub, HTC Netherlands noted that ?Although HTC is a limited party in this matter we regret the decision. At the moment we are in agreement with STM and look at whether it is necessary to look for alternative solutions. In the meantime, we do not expect that this decision will have a direct impact on the sale of our phones.?

Problems have evidently shifted from the marketing segment to general availability issues of what is supposed to be a flagship product for the Taiwanese company. As we mentioned earlier, suppliers for the HTC have focused more on the other companies, as they found them to be more ?reliable?. Now that the shipping issues have been mostly resolved, a new one appeared on the horizon. Whatever actually happened and whoever turns out to carry most of the blame, HTC has suffered yet another severe blow ? and paired with the situation over patents, it appears that the company is caught between the rock and a hard place.